First Home Saver Account
Need help saving for your first home loan? First Home Saver Accounts (FHSAs) are a new government initiative to help Australians save for their first home through a combination of Government contributions and low taxes. It is best suited for those who are planning to buy their first home in 4 years time or longer.
Who qualifies?
An individual can open an account if they:
- are aged 18 or over and under 65;
- have not previously purchased or built a first home in which to live;
- do not have, or have not previously had, a First Home Saver Account; and
- provide their tax file number to the provider.
How does it work?
Contributions are made by individuals from after-tax income to this account. The Government will then contribute 17 per cent on the first $5,000 (indexed) of individual contributions made each year. This means that if you contribute $5,000, you will receive a Government contribution of $850 to the account. However, interest earned on the account will be taxed at 15%. There is also a limit of $75,000 on the overall account balance where government contributions cease.
There are some restrictions on the use of the fund:
- To withdraw the funds, minimum contributions of $1,000 need to be made over the course of at least four separate financial years.
- You can only withdraw the funds tax free if they are used to buy or build a first home in which to live. The full amount will need to be withdrawn and the account closed.
- Alternately, you can close your account and contribute the full amount to superannuation at any time without penalty.
Due to these restrictions, the Home Saver Account is a great way to start your savings program for your first home only if you have a savings plan of 4 years or more. If you already have a deposit and will probably buy your home in the next year or so, this account will not suit your needs.
More information?
For more information on the Home Saver Account, you can visit the government website by clicking here.
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